Extracted from DBS Research 22 Feb 11

 

Not necessary that yards will benefit from this. It is one thing if demand is driving oil price higher and another matter altogether if the rally is fuelled by supply disruption concerns. The former is growth driven; the latter is a result of uncertainty, as in the current case of unrest in the Middle East and North Africa.

Rabbit year forecast

Renowned Feng Shui Master Lee Shing-chak presented to a full house at our annual CLSA 2011 Feng Shui Luncheon in Hong Kong. He views the rabbit as reserve, attentive, conservative, and excitable. The stock market will be range bound with little opportunities to make large profits. The big risks this year could be bird flu, North Korean conflict and earthquake. Gold will do well, but property will not. Market will improve in 2012 leading to a continue rally until recession in 2014-15. He likes entertainment, gaming, transports and tourism sector. Avoid property and construction. Stocks with the luckiest numbers are Yanzhou (1171 HK), NWD (17 HK), Cheung Kong (1 HK) and Tencent (700 HK).

What to watch out for?
The major events to watch out run the full range with disease, economic malaise and war which reflect the Korean War period sixty years ago.

• H5N1 – We could see another out-break of the bird flu as this is a bad year for the rooster. Rabbits use their ears while roosters use their mouth, so the two animals naturally conflict leading to health problems and injuries related to roosters such as H5N1.
• Earthquake – East is a bad direction this year which could cause natural disasters such as earthquake. The earthquake is likely to be in the east which would mean problems for Taiwan or Japan.
• War – The North Korean conflict could escalate similar to the Korean War 60 years ago.
• Inflation – QE2 is causing inflation and a potential Korean conflict will add to the pressure. Gold and agricultural prices will go up the most.

What to buy? Markets, sectors, home prices, and gold
This will be a bouncy year for the market with no large rally or money making opportunities. Market will be weak in 1H, bottoming between May and August and should rally there-after. The best element this year is water which means movement. Thus, transport, logistic, and tourism sector will do well. The western direction is auspicious which means that entertainment including Macau gaming should also do well. He is also positive on gold which will go up to USD 1,600 - 1,800 oz by the end of the year. The best entry point would be mid-year. This is the year of metal which means that it is bad for the wood element. Property and construction will not do well.

Hong Kong property policies will follow Beijing and hence will cap property price. Property price will fall until mid-year and then rebound. Luxury will do better than mass market due to potential new policy. The best area in Hong Kong is Tai Koo Shing. Aberdeen could become a luxury market.

This is a good year for the dog sign as dogs always chase and out-runs the rabbit. People who are born in the year of the Monkey or Sheep will make the best investments this year.

Conclusion
As Chinese, we’re always interested in Feng Shui and what the heavens had to say. We may pay more attention this year than last as CLSA’s Feng Shui index was remarkably accurate last year. For real astrological advice we defer to Master Lee. He is forecasting a second half rally much like us, but we believe the rally could be stronger than he predicts. In terms of sector, we both agree on water (transports, tourism, logistics) and entertainment (Macau gaming). He is a buyer of gold, but not HK property. It really all sounds very sensible.

If you want to follow Master Lee, we provide stock suggestions for the sectors he likes:

• Transport – Air China (753.HK), China Merchants (144.HK), Cathay Pacific

• Tourism – Ctrip, Homes Inn

• Entertainment – Sands China (1928.HK), Wynn (1128.HK), SJM

• Gold – Zhaojin (1818.HK)

Lucky number 7 & 1 stocks – Stocks above and: Yanzhou Coal (1171.HK), New World Development (17.HK), Tencent (700.HK), Cheung Kong (1 HK), Want Want (151.HK), PetroChina (857.HK), China Telecom (728.HK)

For the market, February 2011 should see a slow start to the year, with the Rabbit reluctant to emerge from its hole for fear the tiger still lingers. March calls for patience as opposing forces test investors’ metal. As the Rabbit finds his feet, wealth will come from the West in April and prove a great month for those with stamina.

May begins with one of the year’s four most auspicious dates (14 May), but we expect a tumble in June, providing a great buying opportunity for the savvy. Investors may want to rethink their summer-vacation plans: we see markets rising sharply over July and August. Money will flow.

With Fall comes a fall: the CLSA FSI predicts a sharp decline in September – but not for long. October marks a sustained market rally with money flowing abundantly through to the end of November. However, investors should remain focused as markets decline during December. Come January 2012, the Bunny bounces back to close the year on a high.

Sector-focused investors should pay attention to the five elements: Metal is hot, water is bubbly, fire is on fire, wood would if it could and earth is soiled. So where to invest? It will be a great year for Financials, Gaming, Gold, Resources and Transport. While gold didn’t break US$2,000 per ounce as we predicted in 2010, we are confident the Rabbit will provide the carrot this year. It will be a good year for Oil and Gas, Technology, Telecoms, Internet and Utilities, but an unexciting time for the earth-related Property sector.

In terms of the Zodiac, 2011 most favours those born in the years of the Cow, the Sheep, the Dog and the Pig, while Tigers and Roosters will experience a bumpy year. We foresee a great year for HK Tourism Board Chairman James Tien Pei-chun, a fire dog, and Kim Jong-un, North Korea’s well-fed heir apparent, a water dog whose birth date has been amended to make it more auspicious.

This year’s most auspicious dates are 14 May, 4 August, 15 November and 16 January, while the least auspicious are 16 June, 22 June, 23 September and 15 December.

All in all, the year of the Metal Rabbit provides great opportunity for investors to reap the rewards of astute investing, but they should be forewarned: those who chase two rabbits will not catch one.

Extracted from Nextinsight.net Gin

1973 oil crisis
1983 recession
1987 black Monday
1991 Iraq kuwait war
1997 Asia financial crisis
1999 Dot com bust
2001 911
2003 SARS
2008 US financial crisis
2009 Dubai's debt
2010 Euro crisis / N. Korea
2011 Egypt unrest spreading to other middle east countries? unresolved Euro crisis? Commodities bubbles? High speed trading?

Extracted from Nextinsight.net observer2

1. PRIDE: Many of us believed that we had the right winning strategy after we had made a series of successful trades. Pride then began to creep in and often led us to become over-confident, complacent, inflexible, stubborn or resistant to changes. Pride comes before a fall and humility before wisdom. The fact is that, in a rising bull market, just about everyone can make profitable trades easily and to behave like an expert, as little knowledge, skills or experience is necessary to be successful at this time. Our greatest enemy in the stock market is truly OURSELVES. We have complete freedom to decide what and when to buy or sell. Yet when things go wrong, why do many decide to blame, the big boys, analysts, falling US market, our remisers or friends or anyone else (except ourselves)? If we repeatedly achieved the same poor end-results, it should become obvious that we need to examine our operating method and ourselves.
2. FAILURE TO FACE REALITY & TO DICOVER A SUITABLE WINNING STRATEGY: It is a well-known fact that the majority of gamblers, traders, punters and speculators lose money. For many, stock trading is most exciting or thrilling so long as the trade is in their favour but it can also be very stressful and agonizing when the trade is against them. However, the reality is that not everyone has the right temperament, knowledge and skills to be a successful trader. How many of us are able to cut loss easily on a bad trade? Sadly, many of us buy a stock as a “speculator” but ended up as an “unwilling investor or baby-sitter”. Most people also tend to release (sell) too early all the “eagles that could soar to the sky” and to keep with them what are mostly “lame and sick ducks”. Hence, it is common to meet “investors” holding a long list of stocks that are mostly in losing positions. The market also has a clever but harsh way of dealing with long-time holders of losing positions. Occasionally, one of the lame ducks would miraculously recover and start to run far enough as to enable the owner to sell it with full recovery of capital loss plus some profits. This duck then would immediately transform itself into an eagle and soar to the sky bringing much grief and heartache to its former owner. It is for each individual to know his own strength & weaknesses & work out a suitable winning strategy for himself taking into account his risk appetite, resources & knowledge.
3. MARKET BEHAVIOUR & TIMING: In a major market correction or sell-down, many stocks often gave up several months of their price gains in just a matter of several days. Hence, the profits accumulated over several months of numerous trades were liable to be wipe out in just a few trades that suffered heavy losses. For those who decided to cut loss and concede “defeat”, their positions were rather similar to that of generals, like Napoleon, who had fought and won almost all their battles (except the last few ones) but lose the war. An important factor to understand was that the stock market generally moved ahead of fundamentals by several months. A bull market usually started in the face of bad news and bad fundamentals and ended when the economy usually remained strong and corporate earnings still rising. This accounted for the existence of bull and bear traps that many fell into. A Conjuror (Magician) is able to fool his audience because he is always “one step ahead” of them. Likewise, the stock market, always being “one step ahead”, has no difficulty fooling the “herd” through false rallies, breakouts and breakdowns. Investors who understand such behaviour pattern and who could keep themselves one step ahead of the herd, would likely have won at least half of the battles and the war because they would be buying and selling before the herd did. For one to do this, one may need to have a complete change of mindset.
4. THE BIGGER FOOL THEORY: When euphoria surfaced in a bullish market, many would be lured into chasing speculative stocks because of the presence of bigger fools willing to buy them at increasingly higher price. Speculative plays often ended abruptly; and when that happened their stock prices could see sharp falls rapidly bringing hefty losses to those who got caught.                                                                                                                                                                                                                        
5. Caught In Vicious Cycle: An investor who bought a stock at the high end of the bull market would invariably be holding it (regardless of whether it was a "defensive stock', “blue chip”, “corn chip” or “potato chip”) with higher downside risk and lower upside capital gain. When a bear market arrived (always unexpectedly), it would just be a question of time before he would be holding and sitting on a losing position (always  painful to cut loss & not many could take it). Unless he had averaged down his entry price, it would usually take a few years or the next bull market for him to recover from his losing position. By that time, the market would again be on the high end; and being so relieved and happy to be “set free from captivity”, he would most likely liquidate the stock with some profit but only to see it gone up much higher as was often the case. Being frustrated, he would likely buy into another stock, which would then also be at a high end; and hence, faced the high risk of being caught in another bear market downturn and becoming a “baby sitter” once again. This is one very bad move that all investors should strive to avoid.